Tezos: the 400 million dollar cryptocurrency victim of a legal dispute
Tezos is a token that aims to set up smarts contracts on its own Blockchain. Still in project, the team was able to gather at its ICO the sum of 232 million dollars in bitcoin and Ethereum. The present value is estimated at over $ 400 million. The two founders - Arthur and Kathleen Breitman - have come into conflict with the head of the foundation - Johann Gevers - who is in charge of collecting the funds already paid. On Sunday, a Breitman lawyer sent a 46-page letter to the other two members of the foundation's board of directors demanding that Gevers be removed immediately. The cryptocurrency (XTZ / BTC) lost yesterday nearly 40% of its value in 3 hours.
Tezos: an immeasurable project from its origins
Reuters reviewed a copy of a Tezos Business Plan dating back to early 2015, which lists Breitman as the leader. The plan provided that if the company survived 15 years, it would have a value of between $ 2 billion and $ 20 billion. The budget provided Arthur Breitman with a salary of $ 212,180 a year, starting in the third year. In August 2015, Breitman, who was still working at Morgan Stanley, founded a Delaware company called Dynamic Ledger Solutions Inc, or DLS, to develop Tezos. He still runs this company today, and it is this same company that holds the Tezos source code.
In April 2016, Arthur leaves Morgan Stanley, and in September, the Breitmans begin working on a new strategy for Tezos: organize an online fundraiser to distribute tokens. But the couple needed funds to continue the project. In the next six months, they received $ 612,000 from 10 private funders.
Tezos: ICO funds raised by a foundation in Switzerland
To lead the ICO, the Breitmans chose a singular structure. Earlier this year, they helped found a foundation in Zug, Switzerland - dubbed "Crypto Valley" because of its many blockchain startups - seeking nonprofit status. The idea, according to documents posted on the Tezos website, was that the foundation would raise funds through ICO and then acquire DLS, the Breitman-controlled company that developed Tezos.
Georg von Schnurbein, co-author of a book on the governance of Swiss foundations, said he was surprised that startups in the cryptocurrency sector, such as Tezos, are creating non-profit foundations in Switzerland.
"For me, the public interest is not clear. Although it is not illegal, creating a foundation to allow inventors to profit from a sale conflicts with its status as a non-profit organization. (...) The fact that there is a for-profit entity and that there are transfers from the beginning is something that works right now, but that will not be viable. "
When completed after 13 days, the project received approximately 66,000 bitcoins and 361,000 ethers, valued at approximately $ 232 million at the time. The total value is now worth about $ 400 million.
Tezos: litigation around project control
Legally, it is possible to make a distinction in two points:
The Swiss Foundation of Tezos holds all the funds raised during the ICO
The Delaware corporation - controlled by the Breitman - holds largely the intellectual property of Tezos.
According to a "Memo Transparency" available on the Tezos website, the intellectual property right should be transmitted to the foundation. In this regard, Mr. Gevers stated that it was intended that the Delaware corporation be sold to the foundation "within a reasonable time". This could imply that the intellectual property of the project is delivered with the company. Later, relations deteriorated:
"The Breitmans opposed the people the foundation suggested hiring" Mr. Gevers.
Another sensitive point, the couple's company has not given up control of the website www.tezos.ch.
"They control the domains, the websites and the mail servers of the foundation, so that the foundation has no control or confidentiality in its own communications" Mr. Gevers
As for the hundreds of millions of dollars in cryptocurrencies collected during the ICO, Gevers said the foundation has slowly started selling virtual currencies at a rate of about $ 10.2 million a week and plans to invest the proceeds. in a diversified portfolio. Cryptocurrency funds are stored in multiple locations over which neither party has control.
Tezos: the status quo condemned by the market
The situation is for the moment is in status quo situation. The letter addressed to the lawyer accuses Gevers of "doing personal business, promoting himself and being in a conflict of interest". He also sought to give the couple a "substantial role" in a new structure that would limit the responsibilities of the foundation.
Mr. Gever responded that he would not resign and that the two members of the board of directors concerned were attempting to make an "illegal coup d'etat". He also tackled Arthur Breitman's past:
"As Arthur did to others before me, it's an attempt to assassinate morals. [The mail] is just a long list of misleading statements and lies. Mr. Gever
Market operators did not wait for a court to sanction the Tezos project token. Massive sales caused a drop in the XTZ / BTC price of nearly 40%. We also note the large volumes. As a reminder, cryptocurrency is only available on the HitBTC platform where it has the status of "presale".
Fall of Tezos by almost 40% on HitBTC